Bulls continued to charge the markets during the shortened week ending April 7, driving the key indexes to extend their gains. A variety of factors contributed to the jump, including higher-than-expected PMI manufacturing data, monthly car sales figures, preliminary Q4FY23 statistics from banks and NBFCs, FII inflows, and the RBI’s unexpected halt in interest rate hikes with an upward adjustment in the growth outlook to 6.5 percent from 6.4 percent.
The BSE Sensex jumped 841 points, or 1.4 percent, to 59,833, while the Nifty50 gained 239 points, or 1.4 percent, to 17,599, led by banking and financial services, auto, pharmaceutical, and infrastructure companies.
The wider markets rose as well, with the Nifty Midcap 100 and Smallcap 100 indexes rising by 1% and 2%, respectively.
Experts predict that the momentum will continue, although with some volatility, in the holiday-shortened week commencing April 10 with a focus on corporate results, inflation data, global news flows, and FOMC minutes.
“Given the upside potential of domestic growth and a stable financial market, India is expected to have a competitive advantage in the performance of equities in the future.” “We can expect FII inflows to thrive in the future,” said Vinod Nair, Head of Research at Geojit Financial Services.
According to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, the D-street will concentrate on macrotrends in the future. He added that the direction of the markets would be determined by global news flows and the actions taken by various governments to address their economies.
The market will be closed on April 14 in observance of Dr. Baba Saheb Ambedkar Jayanti.
The following are the top ten reasons that will keep traders active next week:
1) Corporate Earnings
Index heavyweights Infosys on April 13, Tata Consultancy Services on April 12, and HDFC Bank on April 15 will kick off the corporate results season for the March FY23 quarter.
The banking and financial services, and auto industries are projected to drive quarterly profit growth, but metals and mining may be heavily impacted by commodity price declines and poor realisation. Net income and sales growth might be in the double digits.
“In Q4 FY23, we anticipate a 6.5 percent YoY and a 17 percent QoQ increase in net income for the Kotak Institutional Equities universe.” Excluding the metals and mining industries, net income in the covered universe is likely to rise 18% year over year and 12% quarter over quarter, according to Kotak.
Consumer staples, IT services (with muted constant currency sales growth), and pharmaceuticals are expected to have a moderate on-year rise in net income.
Motilal Oswal predicts MOFSL profits to climb 15% year on year, while Nifty earnings are expected to gain 14% in Q4 FY23, driven by the BFSI and auto sectors, which are expected to expand 37% and 70% year on year, respectively.
The firm also predicted that the MOFSL Universe’s overall performance would be hampered by a significant drag from metals, which is expected to record a 35% year-on-year profit decrease.
2) Consumer Price Index Inflation
Consumer price inflation, which measures the change in prices of a basket of goods and services, is expected to fall below 6% in March and on April 12, with food inflation moderating from 6.4 percent the previous month, while core inflation is expected to remain stable at 5.9 to 6 percent.
“We expect CPI inflation to have moderated materially in March, with headline prices at 5.7 percent YoY, with food inflation accounting for the majority of the moderation,” said Rahul Bajoria, MD and Head of EM Asia (ex-China) Economics at Barclays.
According to Barclays, the RBI’s preferred core inflation index would fall to 5.94 percent year on year in March, owing in part to a high base. “We expect gold inflation to rise as its international price rises through March,” Bajoria added, “while we expect some stickiness in education, health, and housing inflation.” The Reserve Bank of India’s long-term inflation objective is 4% (+/- 2%).
Aside from CPI inflation, we will receive industrial output statistics for February on the same day, while WPI inflation, the balance of trade, and foreign currency reserves for the week ending April 7 will be revealed on April 14.
3. Inflation in the United States and FOMC Minutes
On the global front, investors will be looking for indications from US inflation data and the FOMC minutes, which will be issued on April 12. Overall, inflation is predicted to fall further to approximately 5.3 percent in March, down from 6 percent the previous month, while core inflation is expected to remain stable at around 5.5 percent, according to Trading Economics’ projection.
In February, inflation fell to 6% from 6.4% due to decreased energy and fuel oil costs, the cost of used automobiles and trucks, and a slower rise in food prices.
The FOMC minutes for the March meeting, released by the Federal Reserve’s board of governors, will be widely watched given evidence of softening labour markets and weaker-than-expected economic statistics, since they normally provide guidance for future interest rate policy. Given the rising inflation, the Fed raised the fed funds rate by 25 basis points to 4.75–5.00 percent at its most recent policy meeting.
“The FOMC meeting minutes will be released next week, which could have a significant impact on the global market.” “Investors are looking for signs of a future FED interest rate pause, which can have a positive impact on the global market or vice versa,” said Geojit’s Vinod Nair.
4) Global Economic Data Points
Other significant global economic data items to keep an eye on next week are China’s inflation and US employment numbers.
5) FII Flow
Consistent FII inflows boosted markets as the US dollar index and bond rates fell, and analysts predict the flow will continue in the expectation that the Federal Reserve will contemplate a halt in the interest rate hike cycle sooner rather than later.
FIIs net acquired about Rs 1,600 crore worth of shares in addition to Rs 2,243 crore worth of purchases the previous week, while domestic institutional investors took advantage of the market surge, selling shares worth over Rs 2,200 crore.
“The sustained FPI selling phase appears to be over.” Furthermore, Indian values have now become more realistic. The fourth-quarter earnings season will have an impact on FPI inflows. “More money is likely to flow into financials, capital goods, automobiles, and automobile components,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The US dollar index, which measures the value of the US dollar against the average of the world’s six top currencies, fell from $105.59 to $101.73 in the previous month, while US bond rates fell from 3.99 percent to 3.4 percent. As a consequence, the Indian rupee has recently appreciated against the US dollar, reaching 81.84.
6) Oil prices
Crude oil prices hit a month high, with international benchmark Brent crude futures rising to more than $85 a barrel, up from $79.77 a week earlier, and WTI crude rising from $75.67 to $80.46 a barrel in the same period, following surprise OPEC+ output cuts and a larger-than-expected draw in US oil stocks. However, the gains were halted at the conclusion of the week when disappointing US economic data sparked concerns about the demand picture.
As a result, whether oil prices remain at current levels or extend their surge further in the next few weeks will be widely monitored.
7) Technical View
On a weekly basis, the Nifty has produced a bullish candlestick pattern, with higher tops and higher bottoms for the second week in a row, with the momentum indicator RSI (relative strength index) showing a lovely positive crossing. Another encouraging indicator is that the index has returned to above the 50-week EMA (17,426 on the exponential moving average).
As a result, analysts predict that if the index stays above the 50-week EMA, it will eventually reach its short-term obstacles of 17,800, the psychological 18,000 level, and critical support at 17,300, the current week’s low.
“Nifty has been in a timewise correction for the last few months and has delivered a significant reversal from the major support region in the previous few days, which is the first hint of a solid base formation around the 16,700-16,800 levels,” Mantri FinMart’s Arun Mantri said.
Among the technical levels, he believes that 17,800–18,100 will be the near-term obstacles, with fresh highs predicted in the next quarter.
8) F&O Cues
According to the weekly option data, the 17,600 level is predicted to be a critical mark for the future direction of the Nifty 50, with the most call and put open interest. Furthermore, the index may encounter severe opposition around the 17,600–17,800 range, with 17,500 serving as near-term support and 17,000 serving as critical support.
“Traders who are looking forward to next week’s expiration don’t expect much action on either side unless global markets move a lot over the weekend.””The Nifty is currently very close to a congestion zone between 17,650 and 17,900, but there is a strong buy on dips sentiment,” said Rahul Ghose, Founder and CEO of Hedged.
The largest call open interest was seen at the 17,600 strike, followed by the 17,700 and 17,800 strikes, with call writing at the 17,600 strike, while the maximum put open interest was observed at the 17,500 strike, followed by the 17,600 and 17,000 strikes, with writing at the 17,600 strike.
9) India VIX
The volatility has decreased significantly in recent weeks, with the India VIX falling 8.8 percent for the week to 11.79, the lowest weekly ending level since July 2021, from 12.93 levels the previous week.
Experts believe that if volatility remains around current levels, the bulls will be in a comfortable position.
10). Business Action
Emami, Schaeffler India, Britannia Industries, Varun Beverages, Visaka Industries, Edelweiss Financial Services, and Goodluck India will trade ex-dividend, while Schaeffler India, Britannia Industries, Varun Beverages, Visaka Industries, Edelweiss Financial Services, and Goodluck India will trade ex-buyback in the following week.
Here are key corporate actions taking place in the coming week:
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